July 28 (Bloomberg) -- Ford Motor Co., the second-largest
U.S. automaker, will spend 40 billion rupees ($906 million) on a
second car factory in India to cut shipment time to the northern
part of the country and access ports on the nation’s west coast.

The company will build the plant with an initial capacity
to make 240,000 cars and 270,000 engines annually in the western
state of Gujarat, Ford said in an e-mailed statement today. The
factory will start production in 2014, it said. The company has
a plant near Chennai in the southern state of Tamil Nadu.

Ford is following General Motors Co. and Tata Motors Ltd.
in building a factory in Gujarat. The plant will allow the
company to ship cars faster to the north of the country, Joe
Hinrichs, president for Ford Asia Pacific and Africa, said in a
conference call. Presently it takes about 10 days to transport
cars from Tamil Nadu to the northern state of Punjab, he said.

“It’s a very good strategic move by Ford,” said Deepesh
Rathore, the India head of IHS Automotive. “Gujarat’s location
on the western coast will give Ford access to the European
market as well as access to northern India.”

Ford sold 95,395 passenger cars in India in the year ended
March 31, giving it a 4.8 percent market share, according to
data from the Society of Indian Automobile Manufacturers.

Earlier this month, Ford introduced a new variant of its
Fiesta sedan, the first of eight models the company intends to
introduce in the country by 2015.

“This new factory will allow us to balance our
manufacturing footprint in India,” said Hinrichs. “This plant
is critically important for Ford. The ride up won’t be a
straight line but we’re bullish about India.”

Tata Motors Ltd. last year opened a factory in Gujarat to
build its Nano small car.